Capital Rationing Is Generally a Positive Action for a Firm

question 109

True/False

Capital rationing is generally a positive action for a firm because it prevents rapid growth, which can drive up the cost of capital.

Analyze the sociological approaches to studying groups and organizations from both micro and macro levels of analysis.

Evaluate the impact of power and money on susceptibility to groupthink.

Comprehend Cooley's concept of primary groups and its relevance in sociology.

Assess the relevance of the theory of McDonaldization beyond the fast-food and service industries.

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Definitions:

Hedge Funds

are investment funds that employ a variety of strategies to earn active return, or alpha, for their investors, often involving higher risks and aiming for higher returns than traditional investments.

Survivorship Bias

The logical error of focusing on instances that survived a selection process and overlooking those that did not because of their lack of visibility.

Backfill Bias

A bias that can occur when historical performances of investment portfolios are artificially inflated because only successful funds are reported or included in analyses.

Incentive Bias

A psychological lean or predisposition towards certain decisions or actions due to promised rewards or incentives.